Correlation Between Genpact and MSA Safety

Can any of the company-specific risk be diversified away by investing in both Genpact and MSA Safety at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Genpact and MSA Safety into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genpact Limited and MSA Safety, you can compare the effects of market volatilities on Genpact and MSA Safety and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Genpact with a short position of MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and MSA Safety.

Diversification Opportunities for Genpact and MSA Safety

0.21

Correlation Coefficient

Genpact  MSA Safety

Modest diversification

The 3 months correlation between Genpact and MSA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and MSA Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety and Genpact is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Genpact Limited are associated (or correlated) with MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of Genpact i.e., Genpact and MSA Safety go up and down completely randomly.

Pair Corralation between Genpact and MSA Safety

Taking into account the 90-day investment horizon Genpact is expected to generate 8.42 times less return on investment than MSA Safety. But when comparing it to its historical volatility, Genpact Limited is 1.37 times less risky than MSA Safety. It trades about 0.02 of its potential returns per unit of risk. MSA Safety is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  16,939  in MSA Safety on September 17, 2024 and sell it today you would earn a total of  502.00  from holding MSA Safety or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Genpact Limited  vs.  MSA Safety

Genpact Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact reported solid returns over the last few months and may actually be approaching a breakup point.

MSA Safety

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genpact and MSA Safety

The main advantage of trading using opposite Genpact and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, MSA Safety can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MSA Safety will offset losses from the drop in MSA Safety's long position.

The idea behind Genpact Limited and MSA Safety pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.